1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

S O U T H A F R I C A
F u rt h e r m o re,dual listings on the JSE and other SADC exchange
a re now permitted, as are the issue of SADC depository
receipts in South Africa for firms listed elsew h e re in the re g i o n .
Financial institutions’ limit for investment in SADC stock
exchanges was raised from a maximum of two percent of net
a n nual cash inflow to 10 perc e n t ,subject to the overall asset sw ap
limit of 15 perc e n t .
C u rre n t ly, the JSE’s top five companies in terms of marke t
c apitalisation are Anglo-American Corporation (USD9.1bn), S o u t h
African Breweries (USD8.3bn), De Beers (USD7.5bn), L i b e rt y
L i fe (USD6.6bn) and Sasol (USD6.2bn).
s u rcharges have been abolished and the General Export
I n c e n t i ve Scheme was phased out during 1997. South A f r i c a ’s
tariffs for agricultural products averaged eight perc e n t , m i n i n g
equipment 1.4 perc e n t ,m a nufacturing 17 perc e n t ,c o n s u m p t i o n
goods 28 perc e n t , i n t e r m e d i a ry goods 6.4 percent and cap i t a l
goods five perc e n t .This liberalisation will continue in line with
South A f r i c a ’s commitment to the W TO.
Goods from Botsw a n a ,L e s o t h o, M a l aw i ,N a m i b i a ,Swaziland and
Z i m b a b we do not generally re q u i re import permits. E x p o rt
permits are re q u i red for goods being exported outside SAC U
JSE - Market Statistics (USDm unless otherwise stated)
1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7
Number of listed companies 6 4 7 6 4 0 6 4 0 6 2 6 642
M a r ket cap i t a l i s a t i o n 217 , 046 259 , 523 280 , 257 241 , 246 235 , 318
Number of companies making 40 33 43 52 54
issues(including new issues,
rights issues and bond issues)
Value of new issues 4 , 1 5 0 2 , 8 1 4 5 , 3 7 5 6 , 6 1 0 5 0 , 3 1 8
Volume of shares traded (m) 3 , 6 4 6 5 3 1 5 , 1 4 8 8 , 9 9 3 1 7 , 8 5 4
Value of shares traded 1 3 , 4 1 4 2 0 , 1 5 7 1 7 , 4 3 8 2 7 , 2 5 5 –
Number of trading day s 2 5 0 2 5 0 2 5 0 2 5 0 2 5 0
JSE/Actuaries All Share Index 4 , 893 5 , 867 6 , 228 6 , 657 6 , 202
Average price-earnings ratio 23 . 79 25 . 29 21 . 79 18 . 82 16 . 88
of all listed companies
Average dividend yield (annu a l ) 2 . 4 2 . 1 2 . 3 2 . 3 2 . 8
Source: JSE 1998.
Fo reign Trade and Liberalisation
Despite attempts to diversify its export base,South Africa is still
l a r g e ly reliant on the export of primary and intermediate
commodities to industrialised countries. H oweve r, m a nu f a c t u re d
goods account for about 70 percent of exports to A f r i c a ,w h e re
South African products have been ve ry successful, due to
c o m p e t i t i ve prices, s h o rter supply routes and a go o d
understanding of the African marke t .
I m p o rts mainly comprise capital go o d s , r aw materials, s e m i -
m a nu f a c t u red goods and consumer commodities, and originate
l a r g e ly from Germany, the USA, the UK and Jap a n . T h e re is
evidence that products from other African countries are losing
some ground in the South African marke t ,w h i l e, South A f r i c a ’s
e x p o rts to SADC jumped 30.9 percent to USD2.5bn in 1996,
leading to an increase in the trade imbalance between the South
Africa and the re g i o n .G e r m a ny, the USA, the UK and Japan are
also major export markets for South A f r i c a , along with
Switzerland and the BLNS countries (Botsw a n a ,L e s o t h o, N a m i b i a
and Swaziland). South Africa re c e n t ly concluded a non-re c i p ro c a l
bilateral trade agreement with Zambia, which should incre a s e
trade between the two countries. South A f r i c a ’s principal export s
a re go l d ,base metals and manu f a c t u red pro d u c t s .
South Africa is curre n t ly in the process of liberalising trade,
w h i c h , due to the economic isolation, was heav i ly re g u l a t e d .
Q u a n t i t a t i ve restrictions have been replaced with tariffs, t a r i f f s
h ave been phased down and their structure rationalised, i m p o rt
that are considered to be in short supply or that are contro l l e d
for strategic purposes.
Fo reign Di rect Inve s t m e n t
After the change of government in 1994,the net flow of fo re i g n
d i rect investment changed from a negative balance to a positive
o n e. Fo reign firms have shown an eagerness to exploit the South
African marke t , enhanced by the depreciation of the Rand and
the re l a t i ve political stability that South Africa has enjoyed since
the 1994 elections. F u rt h e r m o re, m a ny fo reign firms use their
operations in South Africa to serve the re g i o n a l ,as well as the
local marke t .
The largest investors in South Africa have been United States’
f i r m s .Other major investors in the country have been Germany,
the UK, S w i t z e r l a n d , F r a n c e, South Ko rea and Malay s i a .
I nve s t m e n t f rom the Asian continent is a re l a t i ve ly new
p h e n o m e n o n .One of the largest investments into South A f r i c a
last year (USD1.3bn) was the purchasing of a 30 percent stake
in the parastatal Te l ko m , by Te l e kom Malaysia and SBC
International (USA).
Multinational corporations have also start e d ,to a certain extent,
to integrate South Africa into their global production netwo r k ,
w h e re by South African operations would be supplying the wo r l d
m a r ket as well as the local marke t .
Fo reign direct investment into South Africa tends to be
concentrated in the Gauteng Prov i n c e, which encompasses the
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